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Do the new EU member states form an Optimum Currency Area with the eurozone? Evidence from six Central and Eastern European Countries

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  • Dimitrios Sideris

    (Bank of Greece and Panteion University)

Abstract

The present paper examines whether six of the new European Union member states -the six Central and Eastern European Countries- form an optimum currency area (OCA) with the eurozone. The study applies the theory of Generalized Purchasing Power Parity, which analyses the behavior of the long-run real exchange rates of a group of economies with respect to a base currency. The findings indicate that the six countries form an OCA with the eurozone for the period following the introduction of the euro.

Suggested Citation

  • Dimitrios Sideris, 2009. "Do the new EU member states form an Optimum Currency Area with the eurozone? Evidence from six Central and Eastern European Countries," SEEMHN papers 16, National Bank of Serbia.
  • Handle: RePEc:nsb:seemhn:16
    Note: The paper was presented at the Fourth Annual SEEMHN Conference hosted by the National Bank of Serbia, 27 March 2009 in Belgrade.
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    EU enlargement; OCA; real Exchange rates; Cointegration; GPPP;

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • F42 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Policy Coordination and Transmission

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